Correlation Between MSP Recovery and NRG Energy
Can any of the company-specific risk be diversified away by investing in both MSP Recovery and NRG Energy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining MSP Recovery and NRG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MSP Recovery and NRG Energy, you can compare the effects of market volatilities on MSP Recovery and NRG Energy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in MSP Recovery with a short position of NRG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSP Recovery and NRG Energy.
Diversification Opportunities for MSP Recovery and NRG Energy
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MSP and NRG is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding MSP Recovery and NRG Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRG Energy and MSP Recovery is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on MSP Recovery are associated (or correlated) with NRG Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRG Energy has no effect on the direction of MSP Recovery i.e., MSP Recovery and NRG Energy go up and down completely randomly.
Pair Corralation between MSP Recovery and NRG Energy
Given the investment horizon of 90 days MSP Recovery is expected to under-perform the NRG Energy. In addition to that, MSP Recovery is 10.06 times more volatile than NRG Energy. It trades about -0.01 of its total potential returns per unit of risk. NRG Energy is currently generating about 0.16 per unit of volatility. If you would invest 3,002 in NRG Energy on August 30, 2024 and sell it today you would earn a total of 6,887 from holding NRG Energy or generate 229.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MSP Recovery vs. NRG Energy
Performance |
| Timeline |
| MSP Recovery |
| NRG Energy |
MSP Recovery and NRG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MSP Recovery and NRG Energy
The main advantage of trading using opposite MSP Recovery and NRG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSP Recovery position performs unexpectedly, NRG Energy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in NRG Energy will offset losses from the drop in NRG Energy's long position.| MSP Recovery vs. Ecolab Inc | MSP Recovery vs. Axalta Coating Systems | MSP Recovery vs. Chemours Co | MSP Recovery vs. Park Electrochemical |
| NRG Energy vs. TransAlta Corp | NRG Energy vs. Pampa Energia SA | NRG Energy vs. AGL Energy | NRG Energy vs. Vistra Energy Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |